Working for the Queen of Hearts is a tough gig. A disappointing quarter and she’s quick to the chopping block. And the ‘severance’ she offers – “Off with their heads!” – no thanks.

While (non-Wonderland) corporate layoffs are often less animated, former employees receiving severance payments have their own concerns if the company subsequently files for bankruptcy: some or all of those payments may be recouped by the bankruptcy estate. A recent Tenth Circuit decision addressed this issue, finding that a company’s severance payments to its former president and board member were not recoverable, at least not under the particular facts of the case. The Court did, however, highlight potential pitfalls that could lead to an alternate result.

MINTZ LEVIN’S BANKRUPTCY & RESTRUCTURING PRACTICE

If you face restructuring issues for your own company, your borrowers, or people you do business with, we can help. We have a strong reputation for representing large, sophisticated debtors in matters that require significant resources and specialized knowledge.Read More